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Housing Mortgage Meltdown: In Foreclosure and Loving It

Psst! Want to live in your house without paying a dime in mortgage? Thanks to the US housing crisis, now you can - at least for a year or two.

More and more struggling homeowners are doing their own mortgage modification: they simply stop paying, and continue to live in their homes while the foreclosure process drags out for a long, long time:

“Instead of the house dragging us down, it’s become a life raft,” said Mr. Pemberton, who stopped paying the mortgage on their house here last summer. “It’s really been a blessing.”

A growing number of the people whose homes are in foreclosure are refusing to slink away in shame. They are fashioning a sort of homemade mortgage modification, one that brings their payments all the way down to zero. They use the money they save to get back on their feet or just get by.

This type of modification does not beg for a lender’s permission but is delivered as an ultimatum: Force me out if you can. Any moral qualms are overshadowed by a conviction that the banks created the crisis by snookering homeowners with loans that got them in over their heads.

David Streitfeld of The New York Times explains why some homeowners are in foreclosure, and loving it: Link

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In many countries, if you don't pay your mortgage, you go to debtor's prison. I'm not advocating that sort of thing, but I'll bet buyers there think twice before jumping into something they know they can't afford in a "worst case situation"

Yeah they also have public stoning because someone committed adultery. come on, this is not the 1700s anymore. I blame greedy banks for the situation in the U.S. If the banks would have learned a little word called "no" rather than lets make a punt load of money. Ius like this Mr. Smith, you really cant afford this loan so we will hit you with a 13% interest ( cause your "high risk") 2 years goes by, Mr. Smith loses his job, draws unemployment, goes and sees a financial planner. financial planner says hey Mr. Smith you will be okay if you get out of your home. Mr. Smith asks how do i do that, financial planner says well you move out. Mr. Smith what will that do to my credit. Financial planner well your only 25, you will be free and clear by the time your 33.... Boom, Mr. Smith's property is foreclosed on. who's at fault? The dough head who financed Mr. Smith.... bottom line!!!!
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@overspent: The "only" referred to the fact that no one should take out that much of a loan when they cannot afford the payments--regardless of their income, be it $20,000 or $200,000.
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I was a squatter. Stopped making payments on my home after getting laid-off. I was expecting a couple of sheriff's deputies to physically remove me any day, but it never happened. Expecting a certified letter in the mail, but I never got one. I stayed in that home for 3 more years. I kept the grass cut. Kept the heat on so the pipes didn't freeze and bust.

Finally, I called the mortgage company (the mortgage had been sold several times). Dumb probably, but the guilt of squatting did bother me, especially after years had gone by. So I had to get out.

That $55,000 house was offered for sale on the court house steps for $87,000. The fees and penalties were so great the balance was $32,000 more than the value of the property.

In the end, the house was purchased for $25,800. It had a nice backyard. On the water. With a pier.
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In many countries, if you don't pay your mortgage, you go to debtor's prison. I'm not advocating that sort of thing, but I'll bet buyers there think twice before jumping into something they know they can't afford in a "worst case situation".

Fiscal irresponsibility, illiteracy and an undeserved sense of entitlement are usually the reasons home owners find themselves in this predicament. (obvious exceptions aside).

Especially hilarious to me are the droves of people who are doing this same thing, and STILL not saving any of the money they would normally be using to pay the mortgage. They are used to getting bailed out by everyone else. Jerk-faces!
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